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On July 8, 2011, the House Committee on Oversight and Government Reform’s Subcommittee on Regulatory Affairs, Stimulus Oversight, and Government Spending, chaired by Congressman Jim Jordan (R-OH), and the House Subcommittee on Higher Education and Workforce Training, chaired by Congresswoman Virginia Foxx (R-NC), held a hearing titled, “The Gainful Employment Regulation: Limiting Job Growth and Student Choice,” to investigate the effect the Department’s gainful employment regulations could have on students, employment, job creation, and economic development. Chairman Foxx stated in her opening remarks:
“Postsecondary education opens doors to greater job opportunities and the chance for a more stable career path, both of which are critical for Americans struggling to make ends meet and support their families in this tough economy. Unfortunately, the administration’s efforts to impose the widely criticized gainful employment regulation on proprietary colleges could severely limit education and job training opportunities to millions of students and inhibit local economic development in communities across the country.”
Ms. Karla Carpenter, a graduate of Herzing University, discussed the important skills she gained from a proprietary school program when she decided to embark on a new career path after 14 years of being a stay-at-home-mom. Dr. Dario A. Cortes, President of Berkeley College, explained how the close-knit relationship between Berkeley and the local business community helps better prepare graduates to compete in the workforce. Dr. Cortes stated that “As new employment demands arise, we have the experience and ability to thoroughly and quickly create new programs that both meet the needs of employers and encourages economic growth.”
According to Mr. Harry C. Alford, President and CEO of the National Black Chamber of Commerce, “black-owned businesses rely on graduates of proprietary colleges targeted by the recent Gainful Employment Rule.” Mr. Alford asserted that “These proprietary colleges serve minority, low-income, and high-risk students at much greater numbers than traditional four-year institutions and have more success doing it.”
Dr. Anthony Carnevele, Director, Center on Education and Workforce, Georgetown University, testified that in their research on higher education and the workforce, the research showed that the for-profit sector has a positive impact on the higher education community. “For-profit institutions are flexible, responsive, and provide an excellent model for faster, more efficient, student-oriented education.” He noted, however, that there have been a minority of non-performing programs that have “tarnished the reputation of the entire industry.” He also stated that the data was “sobering” in that while for-profit colleges enroll about 13 percent of all students, the students attending for-profit colleges represent 48 percent of all defaulters, which results in a waste of taxpayer money and harms the students. It is Dr. Carnevele’s belief that the gainful employment rule “improves the labor market, protecting the value of credentials in the market by steering students to proven programs.”
In general, the Democrats supported the gainful employment rules. For instance, Congressman George Miller (D-CA) said that he was a supporter of the proprietary school sector, but said “friends do not let friends drive drunk.” He said that outliers in the sector are becoming a growing concern to the American taxpayer. Congressman Timothy Bishop (D-NY) said that the gainful employment rule and the sector’s reaction to it must be considered in a budget environment threatening cuts to Pell, SEOG and Perkins aid programs. Mr. Bishop called the gainful employment rule a “modest” effort by Congress to “discharge its responsibility to be careful stewards of the public’s money. Congresswoman Maxine Waters (D-CA) disagreed with Mr. Alford’s comments that private career schools benefit minorities – she believes that minorities attending these schools are being exploited.
The Republicans questioned the need for the gainful employment rule. Chairman Foxx said that the reams of red tape and reporting requirements established by the Department’s rule could make it more difficult for proprietary schools to create the career training programs valued by local businesses. Congressman Patrick Meehan (R-PA) questioned whether the gainful employment rule will cause proprietary schools to stop “reaching back” to those most at risk. One of the opponents to the gainful employment rule came from a Democrat, Congressman Edolphus Towns (D-NY), who said that the emphasis should be on jobs, which is a problem even for graduates of top universities.
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On June 29, 2011, Senators Richard Burr (R-NC) and Ben Nelson (D-NE) introduced a bill that would repeal the state authorization and credit hour definition regulations that were effective July 1, 2011. Senators Lamar Alexander (R-TN) and Mike Enzi (R-WY) are also co-sponsors of the bill. The Protecting Academic Freedom in Higher Education Act, S. 1297, is the Senate companion bill to House bill H.R. 2117, which passed on June 15, 2011, by the House Committee on Education and the Workforce, by a bipartisan vote of 27-11.
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On July 1, 2011, the date the program integrity rules went into effect, Chairman of the House Committee on Education and the Workforce John Kline (R-MN) issued the following statement:
“The Department of Education has put in place a series of short-sighted and reckless regulations that will be detrimental to the nation’s institutions of higher learning. These regulations are just another example of federal intrusion into areas best left to states and education leaders. At a time when individuals should be encouraged to pursue higher education, the department has created new regulations that will deny access to important education programs and weaken the nation’s workforce. On behalf of students and workers, the fight to roll back harmful regulations will continue. The Education and the Workforce Committee has already approved bipartisan legislation to repeal various pieces of the department’s regulations, and we will continue to promote bipartisan initiatives to preserve academic freedom in higher education.”
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On July 12, 2011, Judge Rosemary M. Collyer issued her opinion pertaining to the lawsuit filed by the Association of Private Sector Colleges and Universities (APSCU) last January on behalf of the for-profit college it represents on three of the program integrity rules: incentive compensation, misrepresentation, and state authorization regulations. The ruling denied relief in terms of the incentive compensation and misrepresentation regulations. She did not agree that the rules are “arbitrary and capricious.” Judge Collyer determined that the Department of Education was within its authority to issue the regulations. She wrote: “Just because it may be possible for the department to run amuck in unreasonable and punitive enforcement does not mean that the regulations, as drafted, will ineluctably lead to such a loss of balance and reason.”
The Court did grant one of the arguments made by APSCU challenging state authorization requirements and vacated 34 CFR 600.9(c) pertaining to the approval requirements for online programs. Judge Collyer found that the Department had impermissibly failed to include this proposal in the NPRM and subject it to notice and comment. In other words, the Department did not follow the standards required for the development of regulations under the Administrative Procedure Act. “An agency may promulgate a final rule that is different from a proposed rule, but only if the final rule is a logical outgrowth of the proposed rule” and if interested parties “should have anticipated that the change was possible, and thus reasonably should have filed their comments on the subject during the notice-and-comment period.”
The traditional nonprofit colleges, who also opposed the state authorization regulation, chose not to join APSCU in its lawsuit. Instead, the nonprofits hoped that Congress would block enforcement of the state authorization rule and the credit hour definition regulation. While the House supported the effort to block the Department from implementing these two rules, and passed H.R. 2117, the companion bill, recently introduced, is not likely to pass the Senate.
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On October 29, 2010, the Secretary published the program integrity final regulations, which made changes to the Department’s verification regulations. New 34 CFR 668.56(a) provides that for each award year, the Secretary will publish in the Federal Register a notice announcing the FAFSA information that an institution and an applicant may be required to verify. New 34 CFR 668.57(d) provides that if an applicant is selected to verify FAFSA information specified in the Federal Register notice, the applicant must provide the documentation that the Secretary specified in the notice. Accordingly, the Secretary published in the July 13, 2011 Federal Register the FAFSA information that an institution must provide to an institution to verify such FAFSA information for the 2012-2013 award year, which is the first award year for implementing the verification regulations, along with a list of acceptable documentation. A Dear Colleague followed the publication to clarify the notice (GEN-11-13), which explains that while the goal is to require verification based upon the applicant’s data, in contrast to the current process of requiring verification of a single set of items for all applicants, the customized process is not being implemented for the 2012-2013 award year. In contrast, there will be a variation of the current process for the 2012-2013 award year.
The FAFSA information that can be selected for verification includes:
All Applicants
- Number of household members
- Number of household members enrolled at least half-time in eligible postsecondary institutions
- Food Stamps
- Child Support Paid
- Income Information for tax filers:
- Adjusted Gross Income
- U.S. income tax paid
- Untaxed IRA distributions
- Untaxed Pensions
- Education Credits
- IRA Deductions
- Tax Exempt Interest
- Income Information for nontax filers:
Details are provided as to what is considered acceptable documentation for FAFSA information selected for verification. Access to the Federal Register can be found on the Department’s Web site.
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On June 30, 2011, the Department of Education released several College Affordability and Transparency Lists as part of its efforts to help students make informed decisions about their choice of a higher educational institution. The Higher Education Opportunity Act of 2008 called for the College Affordability and Transparency Lists to be created by July 1, 2011. The Lists, which were broken down by sector, provide:
- The top 5 percent of the highest tuition and fees;
- The top 5 percent of the highest average net price;
- The bottom 10 percent of the lowest tuition and fees;
- The bottom 10 percent of the lowest average net price;
- The top 5 percent of the highest percentage increases in tuition and fees; and
- The top 5 percent of the highest percentage increases in average net price.
In a press release issued on that date, Secretary of Education Arne Duncan said: “The lists are a helpful tool for students and families as they determine what college or university is the best fit for them.” Secretary Duncan also said: “We hope this information will encourage schools to make informed decisions and aren’t saddled with unmanageable debt.” The press release is found at: The College Affordability and Transparency Lists are found at:
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The Department of Defense (DoD) recently made it a requirement that all institutions, accredited by an agency recognized by the U.S. Department of Education, enrolling Title X active duty military members using DoD military Tuition Assistance (TA) dollars, must have a Memorandum of Understanding (MOU) with the DoD. The MOU with the DoD articulates the commitment and agreements between postsecondary education institutions receiving TA funds and the DoD. The MOU ensures that all service members participating in off-duty postsecondary education programs are provided quality education programs uniformly. A signed MOU must be on the “List of Participating Institutions” effective January 1, 2012, to be eligible to receive TA funds.
All institutions that have a signed MOU with DoD will be included on the “MOU Participation Institution List,” which can be found on the DoD website and the MOU website.
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The National Association of State Student Grant and Aid Programs’ (NASSGAP) issued its 41st Annual Survey Report on state-sponsored student financial aid and found that the 50 states, the District of Columbia, and Puerto Rico spent a total of $10.8 billion on student financial aid in 2009-2010, a 3.8 percent increase from the prior year. While there was an overall increase, some of the states cut back on their state awards, including Ohio, with a 66 percent decrease, and Alaska and Michigan, with a decrease of more than 50 percent. Both Hawaii and Utah decreased their need-based grants by almost a third.
Visit the NASSGAP website for more information.
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On July 13, 2011, the Project on Student Debt released a report titled “Critical Choices: How Colleges Can Help Students and Families Make Better Decisions about Private Loans,” that suggests that college financial aid offices can and should play a significant role in reducing their students’ reliance on private loans. The report suggests way that colleges can assist students and their families in borrowing responsibly for higher education. The following practices were suggested:
- Require counseling before certifying private loans;
- Formalize policies and practices aimed at reducing private student loan usage;
- Coordinate between offices, especially the financial aid office and the bursar’s office, to track payments from uncertified private loans;
- Do not include private student loans in offers of financial aid;
- Use available tools to speed up the federal loan process so students who need access to their funds can obtain it;
- Track outcomes; and
- Share both promising practices and outcomes with other colleges.
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Questions were raised at April's 85th Annual DETC Conference in Williamsburg, and the Department of Education has responded to specific questions related to the consumer disclosures and online programs.
- Institutions that offer only online programs do not have to provide crime statistics because they do not have property or buildings that frequently are used by students. Institutions that offer both in-person and online courses need to make Clery Act disclosures to all students, regardless of whether those students attend classes on campus or online. The new State Authorization rules do not change this interpretation.
- Under the regulations for required drug and alcohol prevention programs in 34 CFR Part 86, institutions must adopt and implement a drug prevention program to prevent the unlawful possession, use, or distribution of illicit drugs and alcohol by all students and employees on school premises or as part of any of its activities. Among other things, as part of this plan institutions must provide a description of the applicable legal sanctions under local, State, or Federal law for the unlawful possession or distribution of illicit drugs and alcohol, as well as a description of any drug or alcohol counseling, treatment, or rehabilitation or re-entry programs that are available to employees or students.
As far as a description of any drug or alcohol counseling programs, institutions must describe the programs that are available, but there is no requirement that they develop them. That said, it seems that it would be in the best interest of the students for an institution to provide them with as much information as possible about any programs available to the student at his or her location. There is nothing prohibiting an institution from researching available resources for students wherever they are located.
- Under 668.14(d), an institution in a non-exempt state* must make a good faith effort to distribute a mail voter registration form to each student enrolled a degree or certificate program and physically in attendance at the institution. These voter registration requirements are linked to the physical location or locations of the institution. Therefore, the institution must distribute State-appropriate mail voter registration forms to students physically attending a location of the institution.
*The exempt states are Idaho, Minnesota, New Hampshire, North Dakota, Wisconsin, and Wyoming.
This is the definitive word from the Department of Education.
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